With the last 18 months of interest rate increases, and with an estimated 1.1mil household rolling off some very favourable fixed rates of 2%-3% taken out during the COVID-19 pandemic era by the end of this financial year, many people are starting to look at some of the finances and debt positions to see how they can come up with some reprieve.
As they say – ‘cash flow is king’ – and with a lot of pressure on one’s household income these days, there can be some solutions to consider easing some of the outgoings –
- Interest free credit cards – some banks offer 0% on balance transfers. This means moving your existing credit card to a new provider which does not attract any interest. This can be a very good option to consider given a lot of card provider charge 15%-24% interest in some instances, the catch is not to use the new card as some of the fine print says you’ll pay interest on the whole lot if you do. So please do some research on this, but it can be a very attractive way to reduce debt with no interest being payable
- Consolidate car loans or personal loans into your mortgage. With the uplift in home prices in recent years, this means that a number of people may have some equity available. This could allow a refinance and debt consolidation of smaller debts into the mortgage. We’ve seen this strategy ‘free up’ $600-$900/mth in cash flow for people which can then in turn be used to cover the current increased living costs or put some much need cash injections back into savings. Just be careful doing this as you can often turn a 4/5/7-year personal loan into a 30 year debt being then part of your mortgage, so having a suitable debt reduction plan overall is key to this success.
For all your finance and debt strategy needs, please reach out to Milestone Financial to discuss your situation.
Gillian Burns
Mortgage Broker
Certificate IV in Finance and Mortgage Broking
Diploma of Finance and Mortgage Broking Management